US STOCKS-Futures drop before last-ditch effort at 'cliff' deal

* Obama calls Democratic, Republican leaders to White House
at 3 p.m.

* Chicago PMI, pending home sales data on tap

* Futures down: Dow 67 pts, S&P 8.5 pts, Nasdaq 12.5 pts

By Chuck Mikolajczak

NEW YORK, Dec 28 U.S. stock index futures fell
on Friday as President Barack Obama and top lawmakers planned to
make a last-ditch effort at budget talks to prevent the United
States from going over the "fiscal cliff."

Obama and lawmakers will meet at the White House Friday
afternoon for talks before a New Year's deadline to keep large
tax hikes and spending cuts from taking effect and threatening
the economy with recession.

Investors showed their skepticism about a deal coming in
time as the benchmark S&P 500 index was on track for a fifth
straight decline.

"Obviously all eyes will be on Washington and the headlines
coming out of Washington will dictate today's market movement,"
said Peter Cardillo, chief market economist at Rockwell Global
Capital in New York.

"You do have some economic data coming in, but the market is
probably not going to pay much attention to that. The big thing
is whether Washington will reach a deal by Monday."

U.S. stocks fell for a fourth straight session on Thursday
but managed to to recover most of their earlier losses after the
House of Representatives, in the barest sign of progress, said
it would return to Washington on Sunday night to work on
avoiding the cliff.

Highlighting market sensitivity to cliff headlines, on
Thursday stocks fell more than 1 percent earlier after Senate
Majority Leader Harry Reid warned a deal was unlikely before the
deadline.

With many market partcipants away for the holiday-shortened
week, volume is expected to remain light, which could exacerbate
market swings.

S&P 500 futures fell 8.5 points and were below fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures lost 67
points, and Nasdaq 100 futures dropped 12.5 points.

Economic data expected on Friday includes Chicago PMI for
December at 9:45 a.m. (1445 GMT) while the National Association
of Realtors issues Pending Home Sales for November at 10 a.m.
(1500 GMT). Economists in a Reuters survey forecast a reading of
51 for the main PMI index and a 1 percent rise in pending home
sales.

MagicJack Vocaltec Ltd forecast over $39 million in
GAAP revenue and over 70 cents per share in operating income for
the fourth quarter and appointed Gerald Vento president and CEO,
effective January 1.

European shares drifted lower in thin trade on Friday,
showing little faith among investors that new talks can avert at
least some version of a New Year budget crunch in the United
States.

The yen fell to its lowest level in more than two years,
lifting Japanese stocks to 21-month highs on expectations of
drastic monetary easing, while shares in the rest of Asia rose
as Washington races to avoid a fiscal crisis.

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